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Inequality of opportunities vs. inequality of outcomes: Are Western societies all alike?

Author

Listed:
  • Arnaud Lefranc

    (Robert Schuman Center, European University Institute and THEMA, Université de Cergy-Pontoise.)

  • Nicolas Pistolesi

    (THEMA, Université de Cergy-Pontoise.)

  • Alain Trannoy

    (EHESS, GREQAM-IDEP)

Abstract

This paper analyzes the relationship between income inequality and inequality of opportunities for income acquisition in nine developed countries during the nineties. We develop a new definition of equality of opportunity and show how it can be implemented empirically. Equality of opportunity is defined as the situation where income distributions conditional on social origin cannot be ranked according to stochastic dominance criteria. Stochastic dominance is assessed using non-parametric statistical tests. We measure social origin by parental education and occupation and use national household surveys to assess inequality of income and opportunities. USA and Italy show up as the most unequal countries both in terms of outcome and opportunity. At the opposite extreme, income distributions conditional on social origin are very close in Scandinavian countries even before any redistributive policy. The analysis highlights that inequality of outcome and inequality of opportunity can sometimes lead to different pictures. For instance, France and Germany experience a similar level of inequality of income but the former country is much more unequal than the latter from the point of view of equality of opportunity. Differences in rankings according to inequality of outcome and inequality of opportunity underscore the importance of the policymaker's choice of the conception of equality to promote.

Suggested Citation

  • Arnaud Lefranc & Nicolas Pistolesi & Alain Trannoy, 2006. "Inequality of opportunities vs. inequality of outcomes: Are Western societies all alike?," Working Papers 54, ECINEQ, Society for the Study of Economic Inequality.
  • Handle: RePEc:inq:inqwps:ecineq2006-54
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    More about this item

    Keywords

    Equality of opportunity; Income inequality; Income distribution; Lorenz dominance.;
    All these keywords.

    JEL classification:

    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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